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Impressive bounce in the past two days
Weak hands were shaken out of the crude oil trade from Tuesday to early Thursday but a rebound late yesterday was followed by a $1.54 gain today to leave crude oil only modestly lower on the week.
It does however cap a six-week winning streak after a one-way rally to $77 from $64.
Technically, oil is overbought on a number of timeframes but the dip this week at least clears out the short-term over-extension.
I tend to think that the fundamentals are in charge here. We’ve got US inventories tightening materially every week and set to do the same for about 8 weeks more as the driving season continues. Speaking of that, US gasoline demand last week was the highest ever.
Obviously OPEC+ is the big story to watch but we might get a few more days of quiet and back-channel negotiations before any headlines start flying. I think the market has come around to the idea that the cartel isn’t about to fall apart.